Mobile banking - “It’s not a question of if we implement this, but when”

24 June 2011

The mobile phone is technology that most of us could not afford to live without. These devices have become so important to everyday life, you could almost see them as a limb in their own right, albeit one made out of plastic and wires. In an age where mobile gadgets and technology are increasingly shaping our personal lives, it’s unsurprising that they also are having a considerable impact on the financial services industry.

Industry experts gathered in London at the recent Banking Technology Mobile Banking Summit on 22 June 2011 to try and assess this impact. The day’s sessions were aimed at making sense of mobile and how the financial services industry can harness its power to generate new revenues in both the corporate and retail banking spheres.

The summit opened with a snapshot of the progress of the banking industry in its adoption of mobile tech and the various opportunities and challenges this creates.

Alex Kwiatowski, research manager, EMEA banking, IDC Financial Insights, described the last decade as one of “disappointment” for the mobile channel, saying that the financial services industry as a whole has so far failed to make the most of the technology’s potential. Mobile has had “more trials than the High Court and more pilots than Heathrow,” he stated. The researcher then emphasised that there is a future for mobile technology within the banking industry, but organisations need to increase corporate and retail adoption and pinpoint exactly where mobile sits within a banking ecosystem.

How to create end-user value (and therefore demand) was an issue that was returned to throughout the day. Speakers such as Tom Gregory, head of digital payments at Barclaycard, and Jiten Arora, managing director from Standard Chartered’s Transaction Banking division, both said the excitement of the banks far outstrips that of the consumer when it comes to technology. Mobile banking may not take off until its appeal is clearly obvious to users, as payments as a process is about convenience rather than fun, said Gregory. He likened consumer take-up of mobile banking to that of internet banking 10 to 15 years ago. Initially many consumers thought that entering their bank details in a website would expose them to fraud - and had to be convinced otherwise. “It’s a similar journey of education that the banking industry will have to go through,” he stated.

Adoption of the technology will only become widespread if it can offer efficiency and ease of access - and Arora suggested that this is the same for corporate customers. He talked of the appeal of “anytime, anywhere authorisation”, which can help speed up the processing of payments and enhance business flow. In a panel discussion, Ashley Machin, director of digital banking at Lloyds Banking Group, reiterated how mobile will only take off if it offers core value in terms of reliability and ease of use: “As long as you satisfy customer demands, then the type of platform used does not matter.”

IT security was seen by many as a potential barrier for increased take-up. Tim Decker, senior product manager and European head of e-channels, payments and cash management at HSBC, said corporate banking include large balances and transactions involving millions of dollars - could organisations trust handheld devices to process them?

Kieran Hine, practice leader at Datamonitor, said downloading of software onto smartphones could be a problem. “Consumers have anti-virus software on their PCs but very few have it on their mobile,” he said. He also highlighted potential infrastructure issues surrounding devices and their ability to support Near Field Communication technology, as well as the importance of implementing standards. He asked: “How can a system which is fully operable between banks and consumers be created which reaches across all devices?”

It was also noted that there are human challenges involved with this technology, particularly for corporates. Colin Jowers, global chief operating officer at RBS GBM Research and Strategy, warned “institutions [that have] to safeguard against traders who roll out of a nightclub on a Friday night and have access to banking on their smartphones.”

In terms of the future, many saw mobile not as a banking channel in its own right but one which would work well with other existing solutions - but this will continue to grow as the technology becomes ever more ubiquitous and institutions adjust their ecosystems accordingly. There was also plenty of optimism in the room about business growth opportunities, particularly in emerging markets. Arora from Standard Chartered said that it allows corporate access to the “unbanked” due to mobile’s popularity.

Ultimately, Sirpa Nordlund, executive director at the Mobey Forum, emphasised that despite the slow and steady pace of adoption, the banking industry is continuing to shift the goal posts towards mobile - and for many corporate and retail banks the mobile conundrum has now changed: “It is no longer a question of ‘if’ we implement this solution, but when.”